Donor Privacy

Overview

The First Amendment rights of free speech and free association protect the right of people to be anonymously associated with organizations.  The 1958 case of NAACP v. Alabama confirmed that this right forbids the government from demanding member lists.  Donors have similar privacy interests in not having their relationship to an organization be publicly known.  But when that organization is tax-exempt, the government also has an interest in assuring that the organization is legitimately entitled to the tax exemption.  The question of which interest prevails is currently the subject of litigation and proposed legislation.      

IRS and State Donor Reporting Requirements

Federal law requires the IRS to collect "the names and addresses of all substantial contributors" (typically, those who contribute $5000 or more) to tax-exempt organizations.  The filing requirement is intended to allow the IRS to ensure that organizations receiving tax breaks are legitimate charitable organizations.  The law also reflects concerns that rich donors could use nonprofits to funnel unlimited contributions to political causes.  Although they must report donor names to the IRS, most tax-exempt organizations are not required to publicly disclose those names

California and New York, however, require non-profits to file copies of their IRS donor reports.  The states do not intentionally disclose these reports to the public, but the lists can become public through data breaches or insider misbehavior.

Donor Privacy

Anonymous giving has a long philosophical and religious history, and the privacy interests of donors to non-profit originations are connected to the right of free association under the First Amendment.

Philosophical examination of anonymous giving goes back at least as far as the first century with the Roman philosopher Seneca, who wrote that anonymous gifts allow a person to avoid both praise and blame for the gift.  Anonymity in charity also has a strong history in several religions.  The medieval scholar Maimonides placed anonymous giving among the highest forms of charity.  In Christianity, the Sermon on the Mount preaches the virtue of secret giving (Matthew 6:1-4).  The Koran also describes the value of private charity: "If you disclose your charitable expenditures, they are good; but if you conceal them and give them to the poor, it is better for you" (Quran 2:271).

Modern donations to tax-exempt organizations involve issues of free association under the First Amendment raised in the landmark 1958 case NAACP v. Alabama.   In that case, the Supreme Court held that the State of Alabama could not require the NAACP to disclose its member list to the state.  NAACP members had faced "economic reprisal, loss of employment, threat of physical coercion, and other manifestations of public hostility" because of their connection to the NAACP, and therefore forced disclosure of the NAACP's member list placed a substantial burden on its members' right of free association.  

The Supreme Court has often reinforced the right of anonymous speech and freedom of association.  In McIntyre v. Ohio Elections Commission (1995), it upheld the right to distribute anonymous political leaflets.  In Buckley v. American Constitutional Law Foundation (1999), it held that petition circulators cannot be required to wear name badges or have their names and addresses reported to the state. And in Watchtower Bible and Tract Society v. Village of Stratton (2002), it affirmed the right to anonymously advocate door-to-door.

But the Supreme Court's support for free association and free speech has not been without limits. In Doe v. Reed (2010), a case in which EPIC filed an amicus brief, the Supreme Court held that disclosure of the names of petition signatories under a state open records law did not violate the First Amendment. The court found that the state's interests in "protecting the integrity of the electoral process" and promoting transparency and accountability were enough to outweigh the "modest" First Amendment burdens.  

The privacy interests of donors to an organization are similar to those of members.  Donors may contribute anonymously for religious reasons, to avoid showing how wealthy they are, or simply to avoid ending up on countless mailing lists from other organizations who hope for contributions.  Donors argue that they, too, face "economic reprisal, loss of employment, threat of physical coercion, and other manifestations of public hostility" because of their donations to certain causes.  The IRS itself may have prompted some of these concerns when it revealed in 2013 that it had used political or issue phrases such as "Tea Party," "ACORN," and "occupy" to select organizations for increased scrutiny of their tax-exempt status. 

Legal and Legislative Action

  • Americans for Prosperity Foundation v. Harris
  • Independence Institute v. FEC
  • H.R. 5053, the "Preventing IRS Abuse and Protecting Free Speech Act."   The bill would "prohibit the Internal Revenue Service from requiring a tax-exempt organization to include in annual returns the name, address, or other identifying information of any contributor."  The bill passed the House on a 240-182 vote but has not been acted on in the Senate.

Cases

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